Anti-Corruption in Czech Republic

By Milena Hoffmanová* (Baker McKenzie Prague)

1. Domestic bribery (private to public)

1.1       Legal framework

Bribery of public officials is regulated under the Czech Criminal Code, Article 331, et seq

1.2       Definition of bribery crimes

Bribery crimes can be committed by public officials, private individuals, as well as legal entities. However, a legal entity may be relieved of criminal liability.

Acceptance of a bribe – A person who, in connection with procuring a matter of public interest, for himself or herself or for another person, accepts a promise of a or an actual bribe, for himself or herself or for another person, or in connection with the conduct of his or her business or business of another person, for himself or herself, accepts a promise of or an actual bribe, shall be punished by imprisonment of up to four years or exclusion from the performance of an activity.

Request for a bribe – A person who requests a bribe from another person under the circumstances of acceptance of a bribe as discussed above shall be punished by imprisonment of at least six months up to five years.

Offering of a bribe – A person who, in connection with procuring a matter of public interest, provides, offers or promises a bribe for another person, or whomever, or in connection with the conduct of his or her business or business of another person, provides, offers or promises a bribe shall be punished by imprisonment of up to two years or a fine.

Indirect bribery – A person who requests, has someone promise or accepts a bribe for affecting the performance of a power of a government official by his or her influence, or through a third party, or because he or she has already done so, shall be punished by imprisonment of up to three years.

Definition of “bribe” – A bribe is an unjust benefit consisting of direct material enrichment or another advantage being provided, or to be provided, to a person being bribed or, with such person’s consent, to another person, to which that person is not entitled.

1.3       Definition of public official

The Czech Criminal Code has a broad definition of “public official.” It includes those who perform the activities of government officials as well as those who perform activities of private persons in the sphere of matters of public interest (e.g., provision of healthcare, funeral services and bankrupt assets management).

1.4       Consequences of bribery

The Czech Criminal Code and the Act on Criminal Liability of Legal Entities establish higher penalties for public officials and for those who intend to benefit from bribery or cause damage exceeding approximately EUR 180,000.

(a)        For the individuals involved

  • Up to 12 years in prison
  • Monetary penalty
  • Monetary penalty
  • Forfeiture of property
  • Ban on activities

(b)        For a company/legal entity

  • Termination of the legal entity
  • Forfeiture of property
  • Monetary penalty
  • Forfeiture of a thing
  • Ban on activities
  • Ban on the performance of a public procurement, or participation in concession proceedings or a public competition
  • Ban on the acceptance of a subsidy or subvention
  • Publication of a judgment

1.5       Political contributions

Contributions to political parties are generally allowed.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The Czech Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses. However, a bribe may consist of a gift of any value. Hospitality is not allowed if it is provided unjustly, with the intent to illegally influence decision making.

Whether a hospitality expense could be considered bribery needs to be determined on a case-by-case basis, taking into account all the facts and circumstances surrounding the case.

2. Domestic bribery (private to private)

2.1       Legal framework

Private bribery is regulated under the Czech Criminal Code as well as the Czech Civil Code.

2.2       Definition of private bribery

Criminal Code:
Please see Section 1.2.

Civil Code:

Offering of a bribe occurs when a competitor offers, promises or provides, directly or indirectly, benefits to an individual who is a member of another competitor’s statutory body or a similar body, or a competitor’s employee, or an individual of a similar status, in order to gain, by means of unfair conduct, an advantage for himself or herself, or for another person, to the detriment of another competitor, or an illegal advantage in competition.

Acceptance or request of a bribe occurs when an individual who is a member of a competitor’s statutory body or a similar body, or a competitor’s employee, or an individual of a similar status, requests, accepts a promise of or accepts actual benefits from another competitor, directly or indirectly, in order that such other competitor may gain, by means of unfair conduct, an advantage for himself or herself, or for another person, to the detriment of the former said competitor, or an illegal advantage in competition.

2.3       Consequences of private bribery

Criminal Code: Please see Section 1.4.

Civil Code: A person whose rights were, through private bribery, endangered or breached, may require the offending party to: (i) refrain from such activities; or (ii) rectify its consequences. Such person may also require adequate satisfaction and damage compensation; he or she is also entitled to receive unjust enrichment from the offending party.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

For the criminal aspects of private bribery, please see Section 1.6.

The Civil Code does not establish quantitative or qualitative limitations on hospitality expenses. However, a bribe may consist of a gift of any amount. Hospitality is not allowed if it is provided to a member of a competitor’s statutory body or a similar body, or a competitor’s employee, or an individual of a similar status, in order to gain, by means of unfair conduct, an advantage for himself or herself, or for another person, to the detriment of another competitor, or an illegal advantage in competition.

3. Corruption of foreign public officials

3.1        Legal framework

Corruption of foreign public officials is regulated under the Czech Criminal Code, Section 331, et seq.

3.2        Definition of corruption of foreign public officials

Please see Section 1.2.

3.3        Definition of foreign public official

In the context of corruption crimes, “foreign public official” means any person who:

  • has a legislative, judicial or another function in a foreign state body;
  • performs functions or works in an international judicial body;
  • performs functions or works in an international or multinational organization formed by countries or other subjects of international public law, in its body or institution; or
  • performs functions in a business company in which the Czech Republic or another country exercises a decisive influence,

if the performance of such a function, employment or work is connected to the procurement of a matter of public interest, and the crime was committed in connection with such competence.

3.4       Consequences of corruption of foreign public officials

Please see Section 1.4.

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Please see Section 1.6.

4. Facilitation payments

The Criminal Code does not recognize so-called facilitation payments. Facilitation payments may not be made if they fall under the definition of a bribe. Please see Section 1.2.

5. Compliance programs

5.1       Value of a compliance program in mitigating/eliminating the criminal liability of legal entities

The Act on Criminal Liability of Legal Entities does not specifically recognize a compliance program as an instrument to mitigate or eliminate the liability of legal entities before the crime of corruption has been committed. However, one of the many requirements to establish the criminal liability of a legal entity is that it must be proved that the legal entity failed to take precautions that should have been taken, pursuant to any law, or which could be justly required. Such precautions include, in particular: (i) conclusion of any obligatory or necessary inspection of employees or other persons who are superior to the employees; or (ii) taking necessary measures to prevent or avert the consequences of the committed crime. If such precautions are taken, the legal entities complying with such requirements would be exempt from criminal liability.

5.2       Absence of a compliance program as a crime

Neither the Czech Criminal Code nor the Act on Criminal Liability of Legal Entities recognizes the absence of a compliance program as a crime.

5.3       Elements of a compliance program

(a) Legal framework

The Czech Criminal Code and the Act on Criminal Liability of Legal Entities do not recognize or regulate the elements of a compliance program..

(b) Recommended practice

It is recommended that all precautions be taken, as described in Section 5.1. Regular audits, codes of conduct, education, standard operating procedures and similar precautions should mitigate or even exclude a legal entity’s criminal liability for crimes of corruption..

6. Regulator with jurisdiction to prosecute corruption

The Czech legal system does not have a specific regulator with exclusive responsibilities to prosecute corruption. Any public prosecutor could request that a judge start a corruption investigation.

However, there are discussions regarding the creation of a group of specialized prosecutors who would be responsible for handling large or complicated corruption cases. This group should be constituted by the new Act on Public Prosecutor’s Office, which is expected to be adopted and come into effect in 2017.

 


Baker McKenzie s.r.o., advokátní kancelár
Klimentská 46
110 02 Prague 1 Czech Republic

Milena Hoffmanova

Milena Hoffmanová’s practice focuses mainly on ensuring compliance with legal regulations as well as ethical standards relating to medicinal products and medical devices, including assisting with drafting of internal company guidelines and policies and labelling/packaging requirements.

She also advises on anti-corruption compliance matters, including the extraterritorial application of US law, such as application of the Foreign Corrupt Practices Act and foreign bribery laws. She has experience in a broad range of compliance matters, including corporate and regulatory investigations, FCPA and global anti- corruption compliance, compliance program development, and anti- corruption due diligence, including data privacy issues such as cross- border data flows, data security, whistle-blower hotlines, e-monitoring and other privacy-related issues.

milena.hoffmanova@bakermckenzie.com

Tel: +420 236 045 001